It is that time of the year again when we look forward to a New Year and imagine what is in store for us.
After a very long decade of expansion, all the signs are that the current business cycle is coming to an end.
As 2018 rolled on, uncertainty and risk rose in the international trading environment. The year has ended in turmoil with the US Government ‘shutdown’ and confusion and instability hanging over the world’s largest economy. The world’s second largest economy (and our largest trading partner) is suffering growth indigestion.
2018 was also a year where our new Government, who was surprisingly conservative in its first year, allowed the economic good times they inherited to roll on unhindered and without any major changes.
But will New Zealand start 2019 in a similar low-level tinkering fashion? Has do-
nothing-little become the new political mantra?
Certainly there has been a clear change in the leadership style of our central bank; there is now no doubt about where they stand under Governor Orr.
What will these two lever-pullers do in 2019?
Here is the 2018 data:
|Benchmark updated: Dec-18||Source||NZ$||NZ$||US$||NZ$||US$|
|2008||2017 election||2018 latest|
|Consumer confidence||ANZ-Roy Morgan||102.3||126.3||117.6|
|Crown surplus (bln)||Treasury||-$0.5||+$12.3||+$8.8||+$8.4||+$5.5|
|Exchange rate TWI-17||RBNZ||63.3||75.6||71.9|
|Government net debt bln||Treasury||$10.2||$66.3||$47.5||$57.5||$37.6|
|Country’s net overseas liabilities % GDP||RBNZ||-80.4%||-58.5%||-52.1%|
|Exports (Goods + Services) bln pa||Stats NZ||$45.0||$71.8||$51.4||$80.0||$52.4|
|Current account deficit bln||Stats NZ||-$14.1||-$7.5||-$5.4||-$10.5||-$7.0|
|C/A as % of GDP||Stats NZ||-7.5%||-2.8%||-3.6%|
|Unemployment rate||Stats NZ||4.1%||4.6%||4.4%|
|Employment rate||Stats NZ||65.4%||67.8%||67.5%|
|Participation rate||Stats NZ||68.0%||70.6%||–||70.6%|
|Inflation / CPI||Stats NZ||+5.1%||+1.9%||–||+1.9%|
|Official cash rate||RBNZ||7.50%||1.75%||–||1.75%|
|2 year fixed mortgage rate (avg)||interest.co.nz||8.56%||4.78%||4.48%|
|GDP growth||Stats NZ||-1.7%||+2.7%||+2.6%|
|Median income, week||Stats NZ||$919||$1,807||$1,294||$1,846||$1,192|
|Median house price $(000)||REINZ||$335||$525||$376||$556||$363|
|Median rent $/week 3br house||MBIE||$295||$400||$286||$450||$294|
|Health spending (bln) pa||Treasury||$11.9||$18.4||$13.2||$16.5||$10.8|
|Income tax rate (max)||IRD||39%||33%||–||33%|
|Annual net permanent migration (000)||Stats NZ||+4.3||+72.1||+62.7|
|Core public service (000) FTE||SSC||45.9||47.3||49.7|
|Number of people on a benefit (000)||MSD||269.6||277.2||284.3|
|Population (mln)||Stats NZ||4.270||4.818||4.930|
The US dollar equivalents are recorded so that these benchmarks can be assessed on an exchange-rate adjusted basis. (2017 is NZ$1 = U$0.7163, Q3-2018 is NZ$1 = US$0.6544.)
So, what do you think will happen in 2019? (Please focus on the economic aspects.)
Were you brave enough to record your guess last year? You can find it here and check out how good a forecaster you were.
We love bagging economists and their forecasts, but it seems to me many/most of us who had a crack at what will happen in 2018 got it materially wrong – and in major ways. There were also some flukes that came in but that “accuracy” didn’t seem to extend to other wild guesses, even from the same commenters.
Can you do better for 2019?
This story is to encourage you to record your 2019 predictions.
They can be on any topic that has an impact on the New Zealand economy: anything, including property, interest rates, exchange rates, insurance, rural issues, the dairy payout, our migration issues, our relationship with China, the big international economic influences, even the shifting international power balance. But please try to ground them in the economy. (For example fashion or celebrity comments are not relevant, but climate change issues are.)
You will need to be logged in to comment and respect our commenting policies (and respond to others’ differing views in a respectful and civil way).
Over to you.